Mortgage availability hits 9-year high
If you’re looking for a new mortgage, you’re currently spoilt for choice. New research has found that the availability of mortgage deals has hit a nine-year high while the average cost of borrowing has fallen to a new low.
Moneyfacts has revealed that competition has driven the availability of mortgage deals to a pre-credit crunch high while the average cost of a new mortgage has also fallen.
Largest year-on-year increase in mortgage products since records began
Figures from financial analysts Moneyfacts show that that the number of mortgages available has hit a nine-year high. The number of mortgage deals available in the market has increased by 849 in just one year and now stands at 4,460. This is the highest total since March 2008 when over 6,000 products were available, just before the financial crisis caused the choice of deals to plummet.
“The residential mortgage market has seen a significant increase in product numbers, resulting in the largest year-on-year increase since our records began,” says Charlotte Nelson, finance expert at Moneyfacts. “Thanks to this boom in products, the number of deals available has leaped to its highest point since 2008, which is largely due to the amount of competition in the market.”
Competition is the key reason for the increase in choice, with lenders increasingly offering low-cost rates to encourage borrowers to remortgage. A number of new entrants to the market has also contributed to the availability of mortgage deals.
Moneyfacts recorded lowest average rate ever recorded
Competition between lenders has also had a knock-on effect on the cost of new mortgages. Average mortgage rates fell to new lows this month, with the average two-year fixed rate falling to just 2.30%. The average two-year tracker rate is now just 1.91% which Moneyfacts says is the lowest average mortgage rate ever recorded.
"Providers today do not only need to be price sensitive, but also offer borrowers a variety of features, to allow the customer to almost be able to tailor the mortgage to suit their needs," adds Nelson. "Given the multiple scenarios lenders now cater for, it is little wonder the market has seen product numbers shoot up."
While the choice and price of deals has benefited consumers, the overall mortgage market is significantly different to what it was in 2008. For example, in March 2008 there were just 24 mortgage products at 60% loan-to-value, whereas now there are 549. Conversely, the choice of deals at 95% has fallen from 575 to 257 in the same period.
"When property prices were rising at an incredibly fast pace back in 2008, lending wasn't based on risk," explains Nelson. "These figures show that we have moved to a more structured market, with the number of deals clearly sorted according to risk and borrowers now rewarded for having extra equity.
"Alongside this, the Mortgage Market Review has stabilised the market, making lending more robust, meaning providers can now focus on the life of the mortgage rather than the short-termism of the past. While the boost in product numbers can only be seen as a good thing, the more choice borrowers have, the more confusing it can be, so it is more important than ever that they seek advice to ensure they get the best deal for them.”